Earnings Call: Q2 2018

Jul 13, 2018

Good day, and welcome to the OF AB Second Quarter Financial Report Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jonas Gavastin President and CEO of OF. Please go ahead, sir. Thank you very much. And welcome to this, presentation of the quarter 2 report of OAF. My name is Ygalasco Stosn, and again, CEO of OAF, and I'm sitting here with CFIE Wilson, CFO. And we will take you through the report and some slides that you have access to. For the agenda, we will cover following topics. Of course, business overview, we will talk a bit on the market and some highlights the financials, of course, and CFM will take you through them. We will do a bit of a look into each of the divisions. A few words on the ongoing strategy implementation and then a summary. Starting with the overview of the quarter and also the half year. So you see the headline is that we have an increased profitability and also growth. And looking on the quarter as such went up at 1,000,000,000 on top line compared to 3 point 2, 1 year ago, which was up 12%. The EBITDA ended up at 3.66 equal to the margin of 10.2% then compared to 9.41% year ago. So, I would say that we are, we think it's a strong quarter with an improved, both top line and margin. If you look on the half year, as a result, then we were up 8% on the top line ended up at SEK 7,000,000,000 for the half year and SEK 6 91,000,000 on the EBITDA. Which is 9.8% after 6 months. So, summary of the both quarter, I would say, and the first half year is that we see an increased growth, improved both margin earned profit. And of course, the market I will get back to, but of course, we are operating in an overall favorable market. It's still still in, I would say, the energy markets is a bit sluggish still, but, for most of the segment, it's a favorable market. And at all, if we have a full focus on implementing our strategy in all our divisions then. So all over a quarter that we are happy with, you know, we have still a lot more work to do, of course, but it creates a good base for continued execution the strategy and a continued focus on deliver profitable growth. I will get back a bit more to the details a bit later then. Of course, we would like to highlight the infrastructure. We will do that. And the fact that we also have decent organic growth during the quarter. Well, just a few things about the work. I guess you will know, but we are now above 10,000 employees 2017,000,000,000 dollars, $13,000,000,000 in revenue. Of course, we are a strong Nordic company, but of course, with our current strategy. We also increase our share of international business, especially in the industry division. We have a lot of projects, you see in more than 100 countries. Most of them related to the energy business But we step by step, I would say, see an increase of interesting health and good project in the industry division also outside the Nordic region. We are very selective when doing this to make sure that we get the profit and growth as we hope them. But that's all we are, of course, in a lot of different sectors. So I think one of the good thing is that we have a natural hedge in our portfolio And again, if you look on all of these sectors, I would say, overall, it's a good market. If I would highlight one of them, it is actually the one that is mentioned real estate here, which is a part of the infrastructure market. We call it buildings, a bit in the west. And that's a sector that is we are doing very well. We've seen good margin and a good growth in that sector. So if you would ask us, we don't really see any sign of slowdown. Of course, we are focused very much on commercial building highly advanced buildings in hospitals and airports and commercial buildings. And here we see a continued good underlying demand. But again, a good market, a 1 third approximate is a public sector. A lot of that comes, of course, from our infrastructure business and close to 70% goes to private sectors. So, that's how we are set up, we are organized in 4 divisions, as you know, Infrastructure Industry And Energy And Solutions, And below each of them, we have our business area. We have 21 business areas with a clear P and L focus. Of course, each of them have a clear now a strategy for their for how to improve their position. On top of that, we see an increased demand on cross OS solutions, I would say. So of course, with the big funds we have, also, we have done here on this slide, smart cities and infrastructure, future mobility, industrialization and also the new and changing energy markets we see an increased demand for cross over solutions. So if you look into a sit in now with all the challenges we have from urbanization and globalization and opportunities we see with digitalization, we see an increased demand of OS competence. And this is extremely interesting, and we are getting more and more active in discussions for example, related to smart or future cities then. To mention one interesting area, of course, all the activities are on water in general in cities, will be also, you know, an increased need for having competence in those areas. So that's what I like with our companies that these trends are exactly right into the spot what OS is all about them. So they are helping us a bit more in the market than in quarter 2. The overall market, as we've said, is good. And we see just minor variations compared to previous quarters. So the market is still very strong. Looking on the industry and the industrial market, I would say strong in most sectors, both in Sweden, which is, of course, one of our strong market and of course, the Nordic region, but also Internationally. And again, Within industry, we are stepping into more and more international assignments. As you all know, we have business in China and related automotive we are now starting up a business in South Africa related to a pulp and paper project. And we see an increase demand and for who have, in some of these sectors. We see a continued high rate of investment again within buildings, as I have talked about, but also in infrastructure in general, And you might know that the Swedish transportation plan that was just presented indicates a continued high level of investments in Gendron. And I think this is valid for Sweden, but also for the Nordic region down, of course, including Norway. The end of the market then still is, as you know, then fragmented. Europe is still weak and there are postponement down on investment in general, but we have seen a slight increase in certain niches in Scandinavia than I would say, especially in Sweden. So, still work to do. Also, we'll get back to that for us, but we see at least in Scandinavia that it's obviously stabilizing and some initiatives are picking up slightly then. And of course, the digitalization trends overall drives an increased demand for digital solutions in all markets. Of course, in the quarter, we are assigning a lot of new projects. And I would say in general, the order pipeline it's very good. And we see and as again, and as a consequence of the strong market, and these are just a few of the assignments that we have been signings during quarter 2. We have an interesting hospital in Sweden, Gatenberg. We will do a lot of technical installation design In Switzerland, we have several tunnel and industrial building projects in we have some interesting profit in Denmark. We have taken a new order to all our foods. Foods, which is a turnkey project. We are in an interesting niche, and this shows again then that we have a very strong position in, automotive related to autonomous cars. So this is supporting an order in a customer in California then. And again, I have to say that we have a very strong position in to autonomous cars. And this is something that we find very interesting. We will deliver a complete production line to a battery manufacturer We have some energy related project in Finland as well in Asia. And we see an interest and increase need of floating solar plants. So this is one in Asia, refurbishment of a hydro power plant in Sweden and several, you know, digital related projects within automotive. So, all over, I would say that the order pipeline for Earth it is as strong as ever. Looking on our sessions, because obviously, we are happy that at least, especially in infrastructure, we see a solid organic growth of course, we are stepping up in their acquisitions. As you know, we did a lot in 26 in 2017 was a year when we said 2 things. We are revising our strategy. On top of that, we had the need to strengthen our balance sheet. But now we are gearing up the activities in their acquisitions because we have set a clear strategy direction and now we will make sure that the hunt for the company fitting to the strategy. And during quarter 2, we did a few acquisitions, all of them ending up to an revenue to SEK 35,000,000 and actually a few of them into the digital area, small ones in Sweden. We did one in Cecilia, which is a nuclear waste management and decommissioning a small company, but has a really nice edge supporting exactly what we want to do in energy, really focusing on the niche where we see a continued and interesting growth. We have added on a company in building technology, electronic engineering in Sweden. We acquired a small company in Norway related to Digital. And we actually presented yesterday company in Switzerland and LVP, which is focusing on electrically engineering for trafficking infrastructure that we also find very interesting. So, when you sum up this look on 2018 so far in quarter 1, we did 2 acquisition adding up to $150,000,000 additional revenue. And then with the ones that we just mentioned in quarter 2, we are close to 400,000,000 additional revenue then. And we are continuing to look, of course, for acquisitions. And I think with this pace we have at the moment, and the pipe that we have, I think we are we have the strong focus to turn up and meet the 10% run rate growth as we have in our financial targets then. So, and you see them there are 2, one related architecture and design. And then we have these 31 indigital solutions, building that we find very interesting and nuclear decommissioning. So all of them, I would say, support the strategic plan that we had set for Owa. So we feel happy with that. And it also shows that 4 of them in Sweden and then Norway Denmark and II in Switzerland that we step by step build our base in our core counties as we have decided. Okay. With that, leave over to Stefan a bit more on the numbers, starting with growth? As you as mentioned, we had a good growth in Q3 amount into 11.7%. And if you dig into the top line numbers, we can we noticed that the organic growth was 7.8%, which is up versus last year, both in terms of quarter and year to date numbers. If that's just for calendar effects and currency effects, the underlying growth was 5.85.1 percent. Which gives a year to date number of 4.1 percent, which is up versus last year. Which was a 2.5% in which we have a 2.5% growth rate. We are working in a favorable market, especially in the infrastructure division, which is we that division is the main driver for the growth. Since we do have some challenges in other divisions, but we are focusing on activities in order to support future growth also in those areas. Especially since the market is very good at the moment. And as previous and as we mentioned previously, we are growing also by acquisition 3.6% in the quarter. And we do see an increased prospect portfolio in the group. So we are we are really driving acquisition growth In terms of a profit, we reported an increase to $366,000,000 in the quarter, giving a margin of 10.2%. Which has also a significant increase versus last year. The year to date numbers is 9.8 percent in margin versus 9.1% last year. You might notice that, included a disbursement received from a bankruptcy proceeding of $18,000,000 in the $366,000,000. That item was posted under group wide items So they have no effect on the individual divisions. So the very confined underlying growth. You can always discuss if this is a one off item or not, which is, of course, is. But on the other hand, we have other items which also can be discussed as one off items. So I would claim that underlying profit is in the range between $350,000,000 $355,000,000 for the group for the quarter. Cash flow, once again a stable cash flow, cash flow from operation $400,000,000. However, It was a little slightly below our expectations due to timing effects and calendar effects in projects. The cash flow was slightly negative in the month of June. We have been running at If we look at working capital days at an average of around 40 days, until June, which implies a key ratio, net working capital in relation to say it's 11%, which is the rate that we should be running at which increased slightly during June. So I expect the cash flow coming back in July August. So I'm not that concerned of this effect and this month of June. Of course, acquisition and dividend had had a negative impact on EBIT on the net debt. But so we end up in a SEK 2,800,000,000 net debt position for the for June. Implying a net debt to the EBITDA ratio of 2.2. And that gives a very high capacity for future acquisitions. So the capacity is roughly SEK 1,000,000,000 to support acquisition growth. So we had we claimed that we do have a still a strong balance sheet, which will support our acquisition growth. All right. Thank you, Stefan. So then, just short look in each of the divisions then starting with the infrastructure. Of course, we are we are proud and happy to see that both strong growth and increased profitability in the infrastructure. And again, we see the market is very good. But we also see that we are doing very well. So I would also claim that that, it's not just going on the strong market. I think all Western that has over the last years step by step build a strong position in these infrastructure segments like building technology, I would call it, rail and road as well as then niche areas like architecture that we actually, I would say, have acquired some of the best architects companies and then looking into interesting issues like water and environment. So we have a very good division with highly competent people. And I would say that we are getting this operation better and better. And, we are really set up for the, I would say, future infrastructure including smart and future cities as we talked about. We have, of course, booked some interesting orders both in Sweden and outside, as we mentioned before. And one bolt on that we did in acquisition was effect and that was supporting the position on buildings in Sweden. And you see them again, then the organic growth adjusted for, for, was up to 12% and the EBITDA on 11.4%. So a very good and strong result on the Infrastructure Division. Industrial Division delivered a good profitability, I would say 9.4% in market, general, very good. However, we have C, which is of course the focus right now in the industry division is growth. We have actually a negative growth when you adjust for calendar effect. We are becoming, I would say, quite selective on the industry division, what to do. We have a clear over Robert Larfan, who stepped in as new division of precedent, came coming from ABB is getting the team together and have a strong focus on the overall strategic repositioning to deliver more solutions and increase customer value. We know the market very well in Sweden, Scandinavia as well as Internationally. And we are step by step, putting OS to become even more relevant to our industrial clients. We have booked some very interesting assignments to all our Foods And again, the whole automotive, I would say, market with destructive trends like electrification and autonomous cars is very interesting for us. So I'm sure the industry will deliver a good result moving forward. But of course, short term, there is a challenge to get people on board. There is a big need for engineers in Sweden, but also in Scandinavia. We know that, but we also believe that the work is a very interesting company vertical. So, I would say a good profit for industry, but we know that we need to step up on the growth side in industry. Looking on endly then. I would say that positive thing is that we see a stable profitability at the end of the division ending up at 6.6% in the quarter. We know that the market as such is still fragmented with europe being a bit sluggish. There are still postponement on a lot of investment projects But in some initiatives, we see some changes, for example, nuclear related service, decommissioning we see some pickup and also some other areas, especially done in Scandinavia and in Sweden then. So Also here, we have actually, we are flat, I would say, on the top line, which I think if you go back a few years, we have been declining with a negative profit for some quite some years. And I think this is also in line with our strategy now too. We have stability, of course, we are now continuing our ambition to reposition the whole energy because of course, we know that we need to get back to growth and we also know that we need to improve profit in this one. And this is what it's all about. And the whole division is focused on making that happen. But so far, to have a stability is something that we also are quite satisfied at the moment. But of course, moving forward, we have the fullest ambition to bring this back to growth and also to increase profit. And here we also mentioned during the quarter that Roberto also then that been Divisional president for quite some years have decided to leave the company. We have an acting piece of plug that's been working for work for the law for years. And yes, I would say 10 years plus of experience from end of the business, he is an international player And I'm very confident Peter will in the acting position it has done be a perfect guide continue to lead the strategic overlook and repositioning of Energy Division. So that change we did communicated during the quarter. Finally, then the digital solutions then, also here we deliver a stable profitability on just about 10% EBITDA. And growth, I would say close to 5% organic growth in the quarter. And we have been fighting here because also here, if it's in the area where there's a big competition to get the best competent engineers, I would say this is one of them. Of course, the whole digital disruptive that is going on that goes actually across all sectors. I would say, of course, industry, but also if you look on the annual sector, even infrastructure public sector, there's a huge need for digital competence. And this a fantastic market, but at the same time, we are then fighting to get the best competent people on board who have done. So we are focusing a lot of recruitment activities to improve organic growth. We have a lot of assignments in automotive. And we will continue to bolt on strategic important acquisitions to build the position of digital moving forward. Because we believe that the work that the digital trend and the digital changes that we see will continue for a long, long time. And we really believe that with a strong know how on the industrial sectors we can be more relevant than any others when it comes to implementing digital solutions This does sum up some then you see the summary of quarter 2 then and you know these numbers then. But again then turned up on, and you see each of the division then. And I think we have talked about all of that. So there are some highlights, of course, within infrastructure, both in growth and EBIT. And the other one are stable. We know that the industry has a challenge to get back on growth. But some everything up. It's a good platform for driving continued profitable growth forward. A few slides about the vision and on the strategy and I can tell you that the work internally in OS to execute the strategies as high pace as ever then. And I'm very happy that we can do this repositioning change at the same time as we continue to deliver strong profit and financial performance. So I'm very happy with that. And of course, this is our vision, providing leading solutions for innovations to come or making future, more relevant than ever, we believe, and we see ourselves as a company that creates sustainable engineering and design solution. So sustainability with digitalization do two trends are extremely strong and what can be more relevant than any other companies that might strongly believe. You know also how we have decided to set up the strategic execution in the West, we are looking on growth as one pillar, the value creation, the operations and people, And then step by step, each of our business units are working in these different pillars how to improve. And of course, this is something that takes some times, but we see interest in performance in other areas. And we will continue to implement that, of course, in the coming time then. The business model has been well discussed and done in the work and we see ourselves as having to strong legs. 1 is the service offering we have, but also the fact that we are a company that is also delivering a lot of projects. And you know, the split is roughly sixty-forty than 60% of the revenue goes out in the perfect area. And we are then again done in discussions with each of our units, having clear processes how to improve value. But not the fact that you have to leave service and move all into profit because we can also increase the value creation to our clients also when it comes to service offering. By not just delivering hours. We deliver professional teams. We are looking into the aftermarket because obviously when we have made a lot of installations into the industry and your infrastructure, there is an interesting market and need from our clients to have an aftermarket support And then we are also operating satellites to our clients. And on the project, of course, we are then delivering both time and material project, but we are also involved in fixed price project and turnkey project. The fixed price and turnkey we are doing to the clear clients that we know, for example, Volvo or other industry clients. So I think we have a good balanced risk profile at the world. That we will move on. And I'm extremely thrilled from the opportunities to have them in increasing the value creation, also moving into solution concept and even some signature products that will be complementary to our service and profit offer. The strategy is implemented in a very structured way and we have basically 3 ways that we have done and we started this one during the fall then with the first one. And then we have been talking and discussing a lot how to drive cross overall solutions and develop the business. And I mentioned one example is, for example, Smart And Future Cities that we will be even more clear about in the coming period where we have a strong offer. And of course, we then implement structures and tools to our different units. So how we can leverage from the new organization, improving performance management, optimized incentive model but also supporting also the local units with tools and processes to be able to execute the strategy. So still we have done somewhere, but as always, when you implement the strategy, it is the time that you do to really make it happen all the way out to the local units in all the countries that will make a difference. So, I would claim that we still are in the beginning of a fantastic journey to take off to the level where I think we can be even more relevant and to meet our financial targets. One thing I want to highlight, well, there's a lot of things, but one thing that I'm very proud of that a few years ago, a couple of years ago, we have decided to start up a structure process to how to integrate and work with new integrated engineers. And I'm very proud of the fact that we have now more than 100 recruited new integrated engineers at the West. And we have 2 full time diversity cultures that focus on that to hire these potentials and then support them within who have done. And I would say this is a success story that is actually been discussed in Sweden in different areas. And I'm very proud on that because it also gives a flavor of the values that we have in our company. We are a company that have 10,000 brave devoted team players. And this is just one example where we do things that is a bit different and we're very proud of that. We highlight quite often that one of the values, of course, used to be a tricky workplace and OS has over last year has been ranked from young professional as top 3. Also this year, we're ranked number 2 after the key and actually before Google then. So we have a strong brand by young professionals. Just recently, there was an ranking coming out from, scientific researchers. So a customer saw up to 600 researchers in Sweden and which company we would like to work for. And we're very proud to say that Oftan was faring the number one position together with ABB and AstraZeneca. So if you just look on these 2 together, then first of all, we attract young professionals on top of that, we are a company very relevant for research. Meaning that the development and being able to have the most interesting technology in our company These together builds a strong base for continuing to drive organic growth and attract the best people then. Very proud of that. Financial targets, you know, not repeat myself, we are going for growth. And as we mentioned, we have now, after 6 months, delivers a 4% organic growth, actually stepping up a bit in the quarter, 2 still with industry having the challenge And then we will continue to look for acquisitions. And of course, our target is to deliver or over deliver on the 10% And on top of that, we are looking for platform acquisitions, and this is a discussion that I have of course, finding out what kind of structural platform acquisition could be fined then. EBITDA margin, we want to be and we have said 10% of our business cycle. And of course, with this favorable market, we should get there. But this is something that is a big part of the strategy. And we are actually after 6 months at 9.8 and But this is something that we really have in front of us and we are very dedicated to deliver this it will take some time to get there, but, I mean, I think we have a good base now. And as CFM mentioned, we will end up at 2.2 as a net debt that gives the ammunition to continue to hunt for acquisition. So, summarizing then, these are the numbers we have talked about, we have delivered an improved profit margin. Market is strong and we see a general good demand. We have a strong focus on executing the strategy. So in one way, I would say, of course, it's a quarter where we're, think it's a good base. But I can tell you guys, it's not at all that we are satisfied that we are resting. We know that we have a lot of work to do. Our ambitions are higher. We know that we need to beat the competition. We need we know that we need to deliver even stronger and better solutions to our customers, but it's a good base and a good step in the right direction, but it's far from over. We have a lot more work to do and to make sure that we deliver and put OS where we really can be. A great company then. So with that, I think I will open up for questions. We'll now take our first question from pre drug Savanagh from Nordea. Please go ahead caller. Your line is open. Thank you very much. I just had a question on the pro Solvay, if you could talk a little bit more about what that is and also on the other items. That you Stephan mentioned that could be discussed as one of I think you alluded to extra costs. What would that be in that case? Okay. If we start with the bankruptcy proceeding, it's a very, very old receivable coming from an acquired company. So that has nothing to do with the operations in UHF. So that's an old old claim from a acquired company. When it comes to the other items, I will not go into that because you can always discuss what is a one off item or not. We have different opinions on that. But I will I've just tried to guide you guys and that we did have a positive one off item. And of course, we had in all companies, in all operations, items that could be discussed as having and having had a negative impact on the profit and loss. So see my guidance, see my range of $3.50 to $3.55. More as an indication for you to understand the underlying profit. Okay. Thank you. And your utilization is slightly down. Margin is up. Does this mean that you're pushing through prices successfully? And what is price and what is volume here? You can, I mean, If you look at the utilization rate, it's, of course, very important, but there are other items also important for us which I mean moving into projects means that we are taking a slight hit on the utilization rate since we need to spend more time on tenders and sales efforts? So you can not translate the utilization rate directed to the profit and loss. Coming into price increase, yes, we are able to increase price increase. So if you see the there's a ratio between the costs for our employees, versus the hourly charge, we do. There is we do we are defending that gap. So even if we do have a kind of a wage increase, we can put forward that to clients. And in some specific areas, we are able to increase prices ahead of that gap. So we are pushing prices at the moment. At the same time, as we have mentioned, we are in some areas not positioned to push forward price increases due to competition. There are always companies, competition that are prepared to reduce prices or not to increase prices in relation to wage increases. Yes, the comment from my side also here and I, of course, the CFM says, and I think the whole repositioning or development of the work means that mean utilization will always be one of the extremely important KPIs that we need to follow. But of course, that's more hourly consultants if we do That one is the only very relevant one, of course. But of course, when we are moving more and more into the thing that we really talk about, how to deliver a perfect solution that really is value driven for the customer, the pricing of that will be less on cost plus and more of the value to our clients. So there we can see that we might invest a bit more in ahead as Stephan says in the complex standards, but the prices will be compensating for that. And of course, that's kind of the change that we are just about to do. So that means that we need basically to look on both KPIs. Of course, we moving forward, we always need to make sure that we have a high utilization, but on top of that, become more and more relevant and to make sure that we are differentiating UHF versus local competition. So what I think is coming up with 1 year in the company is that over the sites we have and the confidence we have, we can do things that few other can do. And this is exactly the trend we're doing. And what I'm happy with is that we can do this at the same time as we are delivering a solid financial performance. Thank you very much for that. And just two more questions from my side. First, on market share, are you taking share now in the infra segment because on the comments you had in your presentation, it was as if you were alluding to this. Well, you know, not going into market share is always difficult and challenging. What I can see though is that If I look on our building, building performance, I have to say, I think we're doing very well, and I think we're perfectly on the fact that we are covering a strong local presence, not least in Sweden, but we also see outside Sweden. I actually have to say that I think the performance in that unit is very strong and we see a strong growth. And I would not like to maybe move into the exact discussion about market shares because obviously there is always different use how to measure it, but I'm just looking at one of the areas where we really see that looking at, of course, there is a worry about private housing and the housing market in general, but what we see on the new commercial driven buildings and the need of I would say, renovate and replay some of them. When you look on hospitals, if you look on airport, if you look on shopping, you know, complex buildings. I think, these buildings start to be quite complex and most probably have been that for quite some time because it's easy to see the concrete and the structure of the building. But when you look inside the building when it comes to ventilation, electricity, security, fire alarms, etcetera, etcetera, And also if you add on the connectivity part, the end of the efficiency part that will also be a strong driver, I think this is place where UF will be able to be even more relevant. And I'm happy with the performance. And then, of course, I will not maybe more about market shares, but I can assure you that we will continue to focus on that area. That is very good. Thank you. And then just a final one for me. Industry is slightly slower here for Q2. Could you talk a bit well, how you can turn this around for the coming quarters and years? Yes. I think one factor is, of course, that the industry is focused Sweden at least has a super competitive market that comes to hiring new engineers. You look on customer, I guess one region in Sweden with the whole automotive, they're going stronger than ever. This is strong competition. So we know that that is At the same time, we are done, driving, I would say, the repositioning of the industry and And these two factors have, of course, impacting us, but I know that the industry division, we have the strongest focus on getting back to growth organic growth at the same time, setting the structure for really, driving the business forward. And so I'm not too worried. I think we will get back to growth in distribution also. And it's all about now selecting and take the right orders and prioritize and get through with the price increases. So I think we have a great base, and not too worried moving forward, but it's a challenging competitive market when it comes to finding the best in the nears set before. And we'll take our next question from Lynnberg. Please go ahead. Already. But, maybe you can add on, by elaborating a bit about your Chinese venture and, both how sizable is it right now in terms of employees' revenue? Is it generating a surplus on on bottom line, etcetera? These engineers, are they only working locally, or can you source sort of competence from China to the Nordics in any way or vice versa? Just an update on China would be interesting. You Victor. Good question. First of all, China is interesting for us and we have decided to move into China then to set up a small office related to Automotive a couple of years ago, and we are leveraging for that. Of course, this means that we had people on-site interacting with the customers And then, you know, volume wise, a lot of the kind of production of detailed drawings and is down in Sweden with total headliner as a strong base And of course, since we acquired the former basically Saab in the near team in Toronto. So we have a fantastic high and capability in automotive. Now looking on China, as a market, I would say that my me personally have been there for so many times in my own company, Sandvik. And if you look over to Lars for now who came into driving industry has been living in Shanghai for 2, 3 years with working for ABB. So I think China is a highly relevant market for us. So right now, we are looking into China, not only for automotive, how can we be this not super big base at the moment, leverage moving forward. So we are actually right now looking into China for other industries also then. When it comes to industrial areas, we don't have the biggest business in China. If you look on the pure people on-site, But we are step by step building the capability presence, both in industry, but also other relevant sectors. It will take some time, of course, before we are, we have a big operation in China. But I can tell you the competence level we have for Chinese customers is more relevant than others. If you go back a few years, the Chinese, they wanted to kind of understand how to to, I would say, but how to understand how to make the products that was maybe done in the Western part of the world. But I think they are very interesting now. It's, of course, the engineering knowledge that we have then. And, for example, I can give you one ample advanced manufacturing, we have a fantastic niche in delivering, state of the art manufacturing systems, actually. Robotized automated systems, a lot to automotive industry. We are very strong in Sweden, to automotive industry. And this is something where we see a big interesting need in China then when it comes to advanced manufacturing systems, supporting the big demand in manufacturing in China. You said about using China for maybe pulling back engineering. I'm not sure that China is the best place on it's not really a low cost country anymore. There are other areas that we for 4 are looking into for a while because that's one of the areas that we will look deeper into how to establish strong offshore sourcing basis for supporting growth. Look for that China is the 1. I think China will support China. That's what we see in all the industrial companies that 20 years ago, you thought maybe a bit like you could use China for other parts, but now I think most of the company uses China for China because the Chinese market is huge. So this was a long answer, Victor, to your question, maybe not even on exactly what you wanted to have because I will not disclose how big we are. But it becomes more and more relevant for us. And are you using, no, thank you for the answer, are you using predominantly local skills in China or are you sending Nordic competence? We are building up we are building up local more and more, but of course, we have a few selective on-site for more often. But moving forward, it's absolutely clear that you have to build up your local presence with local people now. So we are looking for step by step adding on local presence who really knows, understands the Chinese market and not least speak the language. And as you know, there's basically 2 sites of companies in China, state owned, huge volume and then the private companies. And the private companies are quite often, west part companies. So all the big automotive players have big factories in China. But there's a huge volume of state owned company and to understand them, you need to have really Chinese local people and who now has to contact. But If you ask Luca Nova now with Robert Lars from them, who's been living in Shanghai, has a tremendous good experience from the Chinese market. So I'm I feel confident that we will step by step be even more relevant in China. It's going back a few years, it felt China is far away, from a distance point of view, but it is in a way as close as in the European countries because the market is huge And, it is, it is interesting. I will not oversell it to you guys because it will take time, but we we discussed China in the West now more and more frequent. Okay. That's good. Thank you so much for the update and good luck with Q3. Thank you. It appears there are no further questions at this time. So I'd like to hand call back over to you Jonas for any additional or closing remarks. All right. But then I would like to thank all of you for listening, this hour. And again, to summarize, we have created a good base, but I can tell you, we are extremely motivated to continue to security with our strategy. And then I would like to say thank you and I would like to wish all of you a great summer and looking forward to meeting you soon again. Thank you very much. Ladies and gentlemen, this concludes today's call. Thank you all for your participation. You may now disconnect.